The first-quarter trading update from Ladbrokes and Coral owner Entain PLC (LSE:ENT) boasted of the “return of retail” but the US and BetMGM remains where the excitement is.
The update covered the first quarter of the calendar year, which meant that the year-ago comparatives for the retail estate were undemanding, given that last year’s performance was blighted by lockdown issues in the UK.
That being said, volumes are said to be settling within 5-10% of pre-Covid levels and it is likely that the temporary closure of many betting shops has prompted many punters to permanently eschew the dubious allure of rubbing shoulders with a bunch of losers (statistically speaking; no moral judgement implied) in a bookie's to staying at home and having a punt online.
Until recently, of course, millions of punters in North America were denied the chance to do their money, whether online or on a Main Street licensed betting shop, but that is all changing.
BetMGM, the company’s joint venture with the casino group MGM Resorts, is now live in 23 markets, including four that started in the first quarter while Ontario went live this month. As a result, BetMGM “has access to” more than 41% of the adult US population.
BetMGM is the established number two operator in the sector and while no business – not even Avis “we try harder because we're number 2” – enjoys not being the dominant player in the market, BetMGM’s 24% share in the areas where it operates is a sizeable chunk. Furthermore, the company said BetMGM is consistently the leading iGaming operator – that’s interactive/online bettering, not necessarily done via an Apple device – with a 29% market share.
The bookie said it is on course to post positive underlying earnings (EBITDA) for BetMGM next year. After that, it should be chocs away for the US market; the company is set to provide more detail on how BetMGM is faring on 12 May.
The growth of the US business should provide some succour (never give succour an even break) for a group that is waiting with some trepidation for the UK Gambling review.
Shore Capital thinks that the UK regulatory risk is overstated in the current valuation.
It rates the shares a buy.
“The market opportunity continues to build, aided by favourable regulatory and structural developments and with its enviable track record, proprietary platform, scale and broadening geographical reach and balance sheet, Entain is well-positioned to exploit these trends,” the broker said.